PRESENTATION TO THE UBS GLOBAL FINANCIAL SERVICES CONFERENCE8 May 2012New YorkNew York

Andrei MagasinerGroup Corporate Treasurer

AGENDA

UK ECONOMIC OUTLOOK

THE UK BANKING SECTOR

LLOYDS’ TRAJECTORY

ON THE HORIZON

SUMMARY

1

UK ECONOMIC OUTLOOKOverview

Growth driven by a diversified business mixEase of doing business is highFloating currency provides flexibility

STRUCTURAL STRENGTHS

Floating currency provides flexibility

MANAGEABLE Despite the crisis government finances are manageableMANAGEABLE GOVERNMENT

FINANCES

Despite the crisis, government finances are manageablePolitical and social will to manage debt downLong maturities and deep sovereign debt market

POSITIVE Consensus expectation: UK is diverging from EurozonePOSITIVE OUTLOOK

p g gSlow but steady recovery in the UK

2

FAVOURABLE FUNDAMENTALS HELP THE UK OUTLOOKThe UK has a strong productivity record, is well diversified

d d i f b iand conducive for business

PRE-CRISIS UK GROWTH WAS STRONG….(1) ….ACROSS A BROAD BASE(2)

2 9%Annual average per capita GDP growth

Business services

Financial intermediation

Di t ib ti

2.4

1 4

2.01.6 1.7

1997 - 20071997 - 2010

2.9%0.4

0.8

Other productionManufacturing excl

electricalElectrical, telecoms

Distribution1.41.2

1.61.3

1.0 1.0

0.5

1.0

0.2

0.70.10.5

0.5

£ DEPRECIATION HELPS COMPETITIVENESS

UK France Japan ItalyUSA Germany,

EASE OF DOING BUSINESS IN UK HIGHER(3)

110120130140

110120130140 Range: Germany, France,

Italy, Spain, Ireland, Greece, Portugal.

Ranking (out of 183 countries)7th

44th

10th19th

29th 30th

87th

Real Effective Exchange rate; 1999=100

708090100110

708090

100110

UK

87th100th

3

707099 02 05 08 11 IRUK GE FR PT SP IT GC

(1) Source: Centre for Economic Performance – LSE (2) Source: GVA, market economy(3) World Bank Oct 2011 ‘Doing Business’ report

MANAGEABLE GOVERNMENT FINANCES IN THE UKRelatively low public debt, long debt maturity and low debt

i i h l k UK’ fi l dj blservicing costs help make UK’s fiscal adjustment manageable

UK DEBT AT MANAGEABLE LEVELS….(1)

WITH LONG MATURITY2017 expected gross public debt(1)

140

120

Average term to maturity in 2012(2)

15

60

100

80

0

10

5

...AND LOW CREDIT RISK PREMIUM FISCAL ADJUSTMENT IS MODERATE

GE IR IT GCFR UK SP PT UK GE SP PTGC FR IT IR

5 year sovereign CDS spreads in bps 2012 13 reduction in primary budget deficit(1)

5

4450

600

450

600

Range: Germany, France, Italy, Spain

5-year sovereign CDS spreads in bps 2012-13 reduction in primary budget deficit(1)

As % of GDP

GE SP GC IRFR PT UK IT0

2

1

3

0

150

300

0

150

300

UK

4

GE SP GC IRFR PT UK IT0009 10 11 12

(1) Source: IMF, April ’12 World Economic Outlook(2) Source: IMF, April ’12 Fiscal Monitor

EUROZONE OUTLOOK WORSENING RELATIVE TO UKConsensus forecasts for UK 2012 GDP growth have fallen, b f h E h i d ibut for the Eurozone they now point to a deeper recession

EUROZONE’S GROWTH PROSPECTS WEAKENCONSENSUS FORECAST ON 2012

JOB MARKET OUTLOOK WORSEN TOOCONSENSUS FORECASTS ON 2012CONSENSUS FORECAST ON 2012

REAL GDP(1)CONSENSUS FORECASTS ON 2012

UNEMPLOYMENT RATE(1)

y/y % change; year-average ILO measure of unemployment; year-average; in %

2

2.5UK

10.5

11

1

1.5Eurozone

9.5

10Eurozone

0

0.5

8

8.5

9

UK

-1

-0.5

Jan 11 Jan 12Apr 11 Jul 11 Oct 11 Apr 127.5

8

Jan 11 Jan 12Apr 11 Jul 11 Oct 11 Apr 12

5(1) Source: Consensus Economics

CURRENT UK ECONOMIC OUTLOOK Slow but steady recovery

GDP Flat in 2012, with modest recovery in 2013

UK BASE RATE To remain at current low levels into 2013

UNEMPLOYMENT Peaking at around 9% in 2013

PROPERTY PRICES Broadly flat

6

AGENDA

UK ECONOMIC OUTLOOK

THE UK BANKING SECTOR

LLOYDS’ TRAJECTORY

ON THE HORIZON

SUMMARY

7

UK BANKING SECTOR RESILIENCEUK banks have been proactively strengthening their balance h i h f h i isheets since the start of the crisis

IMPROVED FUNDING(1)ROBUST CORE TIER 1 CAPITAL(1)

12% 160%

Loan to deposit ratioCore tier 1 capital ratio

10%

140%

10.7%

145%

6%

8%

120%

6.6%

113%

2%

4%

100%

0%

2%

2008 H1 2009 H1 2010 H1 201180%

2008 H1 2009 H1 2010 H1 2011

8

2009 2010 2011 2009 2010 2011

(1) Median core tier 1 and loan to deposit ratio of Lloyds, Barclays, RBS & HSBC, source: Company reports, Lloyds Banking Group calculations

UK BANKING SECTOR RESILIENCE… as a result, UK banks passed both the EBA stress and

i lcapital test

NUMBER OF FAILING BANKS2011 EBA STRESS TESTS(1)

ADDITIONAL CAPITAL REQUIRED:DEC 2011 EBA CAPITAL EXERCISE(2)2011 EBA STRESS TESTS(1) DEC 2011 EBA CAPITAL EXERCISE(2)

10 35.0€bn

8

25.0

30.0

4

6

15.0

20.0

25.0

10.0

0

Irela

nd

Gre

ece

Cyp

rus

Spai

n

Portu

gal

Uni

ted

King

dom

Italy

Aus

tria

Ger

man

y

Slov

enia

0.0

Gre

ece

Uni

ted

King

dom

herla

nds

Cyp

rus

Spai

n

Portu

gal

Italy

Aus

tria

Ger

man

y

Slov

enia

Fran

ce

Belg

ium

Nor

way

9

P KGS K

Net

hPG SB

(1) Other countries that also had no banks failing were: France, Belgium, Norway, Netherlands, Luxembourg, Sweden & Denmark(2) Other countries that also required no additional capital: Ireland, Luxembourg, Sweden & Denmark

AGENDA

UK ECONOMIC OUTLOOK

THE UK BANKING SECTOR

LLOYDS’ TRAJECTORY

ON THE HORIZON

SUMMARY

10

ACCELERATING BALANCE SHEET STRENGTHSubstantial reduction in our loan to deposit ratio, underpinned b i l i iby strong capital position

LOAN TO DEPOSIT RATIO CAPITAL POSITION

148%16.2%

15.6%

130%

135% 14.8%

116%

105%109%

10 0%

11.0%10.8%

Mar 2011 Mar 2012Dec 2011

10.0%

Mar 2011 Mar 2012Dec 2011

Core Group

Mar 2011 Mar 2012Dec 2011

Core tier 1 Total capital

Mar 2011 Mar 2012Dec 2011

11

Now targeting a long term loan to deposit ratio for the Group of 120%

WHOLESALE FUNDINGFalling funding requirement and increasing liquidity

WHOLESALE FUNDING MATURITYPROFILE

WHOLESALE FUNDING £231BNPROFILE

> 1 year 60%£bn

298

251

326

(8)%2 – 5 years

£58bn

>5 years £57b

50%

55%60%

23150% £57bn

1 – 2 years£25bn

50%45%

60%

50%

£55bnmoneymarket

£13bnCGS

£23bnterm45% 40%

Dec 2010 Dec 2011 Mar 2012Dec 2009 Less than 1 year£91bn

Primary liquid asset coverage£106bn

term

12

< 1 yr > 1 yr £106bn

WHOLESALE FUNDING2012 term funding plan already completed

WHOLESALE TERM ISSUANCE(1)£bn

4.4

2.5

24.7 24.7

1.7

4.7 1.9 7.5Unsecuredissuance11.2

2012 SUMMARY

Term funding 13.9

3.9

1.10.6

Privateissuance

completed

No benchmarks planned(2)

10.0

17.2

Publicissuance

Securedissuance13.5

Modest opportunistic issuance possible

Q1 2012 Liability Apr 2012 Total TotalPre-funding

13

Q1 2012 LiabilityMgmt

Apr 2012 Total TotalPre fundingfrom 2011

(1) LTRO not included(2) Issuance does not include related NLGS activity, which we will participate in fully

WHOLESALE FUNDINGAccess to a wide variety of funding products and sources

PUBLIC TERM ISSUANCE FOR 2012BY CURRENCY

PUBLIC TERM ISSUANCE FOR 2012BY PRODUCT BY CURRENCYBY PRODUCT

33% 39% 8%

40%

28%

8%

24%28% 28% 24%

SecuritisationsCovered bondsMedium term notes

EuroUSDOtherGBP

14To April 2012To April 2012

WHOLESALE FUNDING Successful term funding over the last few years

TERM FUNDING£bn

50.0

Successful track record

35.3

Successful track record of term funding

Issuance levels are sustainable

Flexibility for additional i

24.7

issuance

Continue to expect £20 –£25bn of wholesale term£25bn of wholesale term funding per year

20112010 2012

SecuritisationMedium term notes

15

CapitalCovered bondsTerm repo

DELIVERING OUR STRATEGYFour key pillars to be the best banks for customers and h h ldshareholders

Continue to STRENGTHENour balance sheet and

liquidity position

Robust CORE TIER 1 RATIO and stable funding base

RESHAPE our business portfolio to fit our assets,

capabilities and risk appetite

Sustainable, predictable RoE, in excess of our CoE

capabilities and risk appetite

SIMPLIFY the Groupt i ilit i

Significant cost savings and

INVEST t

to improve agility, service, and efficiency

positive operating JAWS

INVEST to grow our core

customer businesses

Strong, stable, high quality EARNINGS streams

16

AGENDA

UK ECONOMIC OUTLOOK

THE UK BANKING SECTOR

LLOYDS’ TRAJECTORY

ON THE HORIZON

SUMMARY

17

CAPITAL: CRD IVCapital adequacy to remain solid at Lloyds

Estimated impact if applied to December 2011 core tier 1

Date of rule change

January2013

RWA increases largely from derivative valuation adjustments, changes in definition of default for retail mortgages and insurance allowances

to December 2011 core tier 1

c. £25-30bn RWAs c. (0.8)%– – – – – – – – – – – – – – – –Proforma c. 10.0% core tier 1

change

Insurance deduction and other transitional adjustments including excess expected losses

Impact: c. (0.25)% paPermanent adjustments

2014–2018Transitionalrules

losses

Illustrative impact: (1.6)%

j

Phased deduction of residual deferred tax assets

Diminishing adjustments

December 2011:– Core tier 1 ratio with CRD IV 2013 rules: c.10.0%– Core tier 1 ratio with fully implemented CRD IV rules: illustrative 7.1%

All impacts are before any further mitigating actions, earnings progression or capital benefits of future non-core run down

18Estimates based on applying CRD IV (as issued July 2011) to Lloyds Banking Group consolidated position as at 31 December 2011

o co e u do

SENIOR UNSECURED BAIL-IN WOULD BE UNNECESSARYSenior unsecured debt is protected by significant loss b b Ll dabsorbency at Lloyds

CAPITAL STRUCTURE – DEC 2011

£79bn

£55bn Ineligible sub debt

Tier 2

Core tier 1

Tier 1

R l t A ti (1)

Core tier 1

19

Regulatory Accounting(1)

(1) Excludes regulatory deductions on core tier 1 (£5bn), tier 2 (£14bn)

INDEPENDENT COMMISSION ON BANKING – RINGFENCING Most of Lloyds’ business would be in the ring fenced bank

POST ICB ENTITIESINDICATIVE SIZE (2014)INDICATIVE SIZE (2014)

ICB follow up still under discussion

c. 20%Insurance

Insurance unaffectedc. 10%

c. 70%

Non-ring fenced bank is expected to include non-EEA, financial institutions and tradinginstitutions, and trading bookRing fenced bank (RFB)

Non-ring fenced bank (NRFC)Insurance

20

CREDIT RATING AGENCIESLloyds’ underlying strength and stability should be

i d b h i i irecognised by the rating agencies over time

Over time, the rating agencies will Lloyds continues to strengthen its balance characterise Lloyds by its underlying core

business again sheet and is managing rating agency

headwinds

“ Th h l b i£bn

245%coverage

“...There has also been an ongoing reduction in non-core assets, strengthening of liquidity, completion of the integration of HBOS, and indications that th t hi h l l f i i t

Wholesale term funding with maturity

223

Short-term wholesale funding

g the recent high level of impairments may have peaked.” Moody’s, 29 November 2011

“ h d l i i h ld b

funding with maturity < 1 year

117

wholesale funding “…the underlying picture should be ... a return to increasing efficiency and profitability as the group develops its deep franchise, multiple brands, economies of

l d i i ”

Unencumbered collateral36

91

“[Lloyds will be] potentially one of the least

scale and pricing power” Fitch, 17 January 2012

Primary liquid assets

10655

21

complex banks globally” S&P, 29 November 2011Mar 2012

AGENDA

UK ECONOMIC OUTLOOK

THE UK BANKING SECTOR

LLOYDS’ TRAJECTORY

ON THE HORIZON

SUMMARY

22

SUMMARYWell placed to realise over time the Group’s full potential for

hgrowth

Floating currencyDiverse and flexible economyFiscally Responsible Government

UK ECONOMY y p

UK BANKING SECTOR

Strong and supportive institutionsProactive in the crisisSECTOR Proactive in the crisis

Resilient core business performance despite environment

LLOYDSp p

Continuing Balance Sheet improvement with lower riskLower steady-state funding requirement

ON THEHORIZON

Well prepared for implementation of planned reformsOver time, rating agencies will refocus on Lloyds’ recognised

23

underlying strengths

FORWARD LOOKING STATEMENTS AND BASIS OF PREPARATION

FORWARD LOOKING STATEMENTSThis presentation contains forward looking statements with respect to the business strategy and plans of the Lloyds Banking GroupThis presentation contains forward looking statements with respect to the business, strategy and plans of the Lloyds Banking Group,its current goals and expectations relating to its future financial condition and performance. Statements that are not historical facts,including statements about the Group or the Group’s management’s beliefs and expectations, are forward looking statements. Bytheir nature, forward looking statements involve risk and uncertainty because they relate to events and depend on circumstancesthat will occur in the future. The Group’s actual future business, strategy, plans and/or results may differ materially from thoseexpressed or implied in these forward looking statements as a result of a variety of risks uncertainties and other factors includingexpressed or implied in these forward looking statements as a result of a variety of risks, uncertainties and other factors, including,without limitation, UK domestic and global economic and business conditions; the ability to derive cost savings and other benefits,including, without limitation, as a result of the integration of HBOS and the Group’s simplification programme; the ability to accesssufficient funding to meet the Group’s liquidity needs; changes to the Group’s credit ratings; risks concerning borrower orcounterparty credit quality; instability in the global financial markets including Eurozone instability; changing demographic andmarket related trends; changes in customer preferences; changes to regulation accounting standards or taxation including changesmarket related trends; changes in customer preferences; changes to regulation, accounting standards or taxation, including changesto regulatory capital or liquidity requirements; the policies and actions of governmental or regulatory authorities in the UK, theEuropean Union, or jurisdictions outside the UK, including other European countries and the US; the ability to attract and retainsenior management and other employees; requirements or limitations imposed on the Group as a result of HM Treasury’sinvestment in the Group; the ability to complete satisfactorily the disposal of certain assets as part of the Group’s EC state aidobligations; the extent of any future impairment charges or write-downs caused by depressed asset valuations; exposure toob gat o s; t e e te t o a y utu e pa e t c a ges o te do s caused by dep essed asset a uat o s; e posu e toregulatory scrutiny, legal proceedings or complaints, actions of competitors and other factors. Please refer to the latest AnnualReport on Form 20-F filed with the US Securities and Exchange Commission for a discussion of certain factors together withexamples of forward looking statements. The forward looking statements contained in this presentation are made as at the date ofthis presentation, and the Group undertakes no obligation to update any of its forward looking statements.

BASIS OF PRESENTATIONThe results of the Group and its business are presented in this presentation on a combined businesses basis and include certainincome statement, balance sheet and regulatory capital analysis between core and non-core portfolios to enable a betterunderstanding of the Group’s core business trends and outlook. Please refer to the Basis of Presentation in the Q1 2012 InterimManagement Statement News Release which sets out the principles adopted in the preparation of the combined businesses basis of

24

Management Statement News Release which sets out the principles adopted in the preparation of the combined businesses basis ofreporting as well as certain factors and methodologies regarding the allocation of income, expenses, assets and liabilities in respectof the Group's core and non-core portfolios.

PRESENTATION TO THE UBS GLOBAL FINANCIAL SERVICES CONFERENCE8 May 2012New YorkNew York

Andrei MagasinerGroup Corporate Treasurer